Much of the work that I do in copyright litigation circles not only around defending John Doe Defendants who have been implicated in some lawsuit or who have received a notice or a DMCA letter from their ISP. Rather,a lot of what I do involves having discussions with copyright holders and their attorneys swaying them from suing individual downloaders.

I wouldn’t say that a newly minted attorney (or a seasoned veteran attorney) who chooses to fund his law firm’s coffers with tons of settlement cash by suing individual downloaders is unethical for doing so — I simply think their attempts to stop piracy by suing downloaders are simply misguided.

Many attorneys justify their attempts to sue individual downloaders by the “death of a thousand cuts” theory, which acknowledges that one “lost sale” from a download won’t hurt anyone. However, multiply that by thousands, and a copyright holder can go bankrupt from the loss of revenue from piracy. While I understand their concerns (and agree somewhat in theory), I still say that going after the direct infringers (e.g., the internet users who copied and distributed the copyrighted content via the use of bittorrent software) is the WRONG approach to solve the piracy problem.

Below is a snippet of an e-mail I sent to an attorney who has been quite proactive on the copyright infringement front. His approach was somewhat different from the Prenda / Lipscomb / Dunlap Grubb & Weaver, PLLC approach to suing internet users, and while I will keep his information private for the purposes of this article, I agree that these predatory lawyers (the “copyright trolls” we speak about on the blogs) have made a mess for the copyright holders, “poisoning the well” for copyright holders who still wish to sue downloaders. I hope reading the following snippet may sway them to pursue other avenues to solve the piracy problem.

Dear [attorney],

I agree with the “death of a thousand cuts” problem when it comes to piracy and bittorrent. I am not sure what percentage of downloaders would actually purchase the copyrighted title (or a subscription to a copyright holder’s service) if the pirated title was not readily available to be downloaded, but it would be interesting to take an unbiased study and research the issue.

I also suspect that much of piracy is a distribution problem. I’ve heard this real-world example [from a few years back] as a justification for piracy. If someone wanted to see the “Game of Thrones” HBO series and they did not have access to HBO’s online website service (e.g., no cable; not going to subscribe), then they go to rent it on Redbox, Netflix, or Amazon Prime, and it is not available, and then they even go to purchase a season online and even that is not available, then they’ll pirate the series and feel justified about it (and they’ll be angry at the company as the bittorrent software moves the files onto their hard drives). I doubt this is the same for much of the adult content litigation (which I suspect infringement is a result of “browse, click and download, then watch”), but I’ve often commented that a wholesale iTunes store-like site (“Red Light Box”) would be a good source for purchasing or renting adult content (which is the subject of many of the lawsuits, as you know).

The jist is that I understand the desire to sue individual downloaders, and I understand the justifications for doing so. I am also certainly not going to sway you from suing individual downloaders with an e-mail.

However, I have always believed that internet users are not the correct parties to sue because many of them do not appreciate the severity for the acts of infringement they commit quite regularly. In other words, they are not the correct parties on whom to put the risk and/or the burden of violating the copyright laws because there are better alternatives available to solve the piracy problem and to mitigate damages from lost revenues. In my opinion, it is better to approach the issue from the “eliminate-the-available-content” approach via DMCA takedown letters, removing links, and taking down bittorrent trackers. Suing the content hosting companies is another approach, as you have explored successfully (although I understand the frustrations of this approach as well — how many times can someone sue The Pirate Bay).

I even don’t like the CEG-TEK $200 per title infringement software system / website solution where they send letters to the infringers days after the download, however, this appears to be the most efficient way to get a quick settlement and teach the downloaders a civic lesson on the dangers of downloading copyrighted titles.

But as for “poisoning the well,” yes, I fully see your point and appreciate the damage these law firms have done with their copyright trolling lawsuits.

This is a rather tricky article to write, especially since I am setting some copyright trolls apart from others, and I am unsure whether this is a good idea or not.

It is my opinion that the “Six Strikes” System which has recently gone into effect will ultimately kill Copyright Enforcement Group’s (CEG-TEK)’s “CopyrightSettlements.com” settlement system. In short, their selling point of attracting new copyright holders (the production companies) with the promise of big profits through volume settlements (from you, the internet users) by the sending of DMCA scare letters directly to internet subscribers via their ISPs will fail. I am concerned that the production companies / copyright holders might decide to start once again suing defendants in copyright infringement lawsuits.

Copyright trolls take two forms — the “copyright troll” lawyer, and the production company who embraces the concept of extorting settlements from so-called “infringers” rather than selling their copyrighted product on the marketplace. There is one entity often missing from our blog’s focus on lawyers and their clients — the “IP enforcement company” (“IP” = intellectual property) who is working behind the scenes to 1) acquire clients for their firm, 2) track the peer-to-peer / bittorrent downloads and torrent swarms, 3) hire and maintain one or more attorneys capable of suing, and 4) converting their tracking efforts into CASH [in terms of $$$ settlements from accused downloaders].

This explains why whether you are sued by Patrick Collins, K-Beech, or Malibu Media, you’ll be contacted by someone on the Lipscomb & Eisenberg law firm’s collection team. Similarly, if the production company is Digital Sin, Zero Tolerance, Girls Gone Wild, etc., then your IP enforcement company is the Copyright Enforcement Group (CEG-TEK) and you will be sent DMCA letters suggesting that you settle their claims against you or else they may sue you (so far, this has not been the rule, but the exception). Yet, if your plaintiff is AF Holdings, Hard Drive Productions, Openmind Solutions, or any of the others connected with Prenda Law Inc. or the new Anti-Piracy Law Group, your IP enforcement company is one of John Steele’s entities. In other words, every copyright troll plaintiff is a client of a particular IP enforcement company, and that IP enforcement company has one or more lawyers on their team (or more often then not, as with John Steele and Ira Siegel — very different entities) — the lawyers themselves appear to own an ownership interest in the IP enforcement companies they run and work on behalf of.

It is my understanding that an enterprising attorney (or members of his IP enforcement company’s sales team) will often attend annual pornography conventions, and they will rub shoulders with production companies who end up being the copyright holders in these lawsuits.

The traditional IP enforcement companies (Lipscomb, Steele, etc.) will tell them, “I am aware of your company’s piracy problem, and I have a solution. Look at all our data as to the piracy of your videos. Our team of experts can track the piracy of your copyrighted content, and our team of “expert” lawyers will sue defendants on your behalf. Instead of defending themselves, the accused internet user will be shamed with a lawsuit and will settle with us for thousands of dollars (average asking price: $3,400), we’ll take our commission, and we’ll both be millionaires. And, we’ll cut down on piracy in the process.

CEG-TEK (the Copyright Enforcement Group) and Ira Siegel has a different approach, and I believe the Six Strikes System will be the achilles heel of their “out-of-court pre-lawsuit settlement” approach.

The Copyright Enforcement Group was essentially formed because Ira Siegel didn’t like the idea of suing defendants and having all of his settlement activities monitored by a federal judge who can ask him uncomfortable questions about his activities. Rather, he has been paying ISPs to send out “DMCA” settlement letters (invoking and in my opinion, misusing the Digital Millennium Copyright Act) in order to scare defendants into settling cases before they are filed in federal court. Settlements average $200 per accused title, but I have seen a few $500 per-title settlements as well.

It is my understanding that the way CEG-TEK acquires new clients — their “unique selling proposition,” if you will — is that they tell production companies, “we can track and sue the downloaders if we want — we have attorneys in a number of states who can sue defendants, and possibly get a $3,400 settlement from a few of them [once in a while]. However, if you come on board with us, we will send DMCA settlement letters out to the internet user directly via his ISP, and that letter will point them to our Copyright Settlements (www.copyrightsettlements.com) website where they can enter their unique username and password and privately pay their settlement fee. The settlement fee will be $200 and not $3,400, but the quantity of users who will pay us our small fee and move on will be significantly higher than those who will settle a federal copyright infringement lawsuit. We’ll all make millions!”

The reason I think CEG-TEK’s business model of sending DMCA letters will ultimately fail is because the Six Strikes System has undermined CEG-TEK’s abilities to contact so many internet users. In short, instead of sending the DMCA letters directly to the ISP subscribers as Charter and a number of smaller ISPs do, the big ISPs have banded together and formed something called the “Six Strikes System” which essentially gives six warnings to their subscribers before giving copyright holders access to their subscriber’s contact information for the purposes of suing for copyright infringement or sending DMCA threat letters as CEG-TEK does every day.

In other words, anyone who has Comcast, Time Warner, Verizon, etc. as their ISP will no longer receive CEG-TEK’s DMCA letters. Instead, they receive a notice such as “we have received a complaint of copyright infringement from your account; stop this activity.” But with ISP members of the Six Strikes Program, CEG-TEK’s DMCA LETTERS ARE NO LONGER FORWARDED OVER TO THE SUBSCRIBERS! What this means is that let’s say 75% of the market share of internet users (I’m using this number merely as a hypothetical) will no longer go online and settle CEG-TEK’s claims against them. Or in other words, the http://www.CopyrightSettlements.com website as of a week or so ago [the plan went into effect roughly a week or so ago] will have experienced a 75% drop in settlements.

Knowing the production companies who signed on with CEG-TEK with the sole purpose of making millions in settlements from these DMCA letters, I suspect that they are starting to get upset and impatient because CEG-TEK’s promise of directing would-be defendants to their website is no longer the money-making machine they thought it would be. As a result, I am concerned that the production companies who signed on with CEG-TEK might start opt for suing defendants once again en masse.

PERSONAL NOTE: I obviously don’t want to scare anyone because I am very far from screaming “the sky is falling.” We have been defending clients in countless cases filed in federal courts across the U.S., and in recent months, there has been a clear change in the level of education of the judges and their feelings towards “copyright troll” plaintiffs. Possibly with the help of our POLICY LETTER (or simply our phone calls and faxes to a judge’s chambers when one is assigned to a copyright infringement case). Judges are now educated as to the copyright trolling problem, and it is much more difficult to go after defendants because our collective arguments (such as, “an IP address is not a person,” and “just because you can prove an IP address snapshot was involved in a download does not mean that copyright infringement occurred,” etc.) are starting to take plant themselves deeply in the federal court system. In other words, if they start suing, we are very prepared, and they are almost a year-and-a-half behind.

UPDATE: Read my note at the bottom of this article for comments about IP tracing issues when you visit CEG-TEK’s settlement website.

A troubling number of people write me who receive “DMCA scare letters” (usually in the form of an e-mail from Copyright Enforcement Group (CEG-TEK) signed by Ira Siegel), and this blog generally neglects these victims because there is no lawsuit filed against anyone — just a “we might sue you if you don’t settle” e-mail which arrives from the ISP. In the past few days, I have found that the inquiries have spiked and I am writing the same letter to a number of people. To save time, I am posting my e-mail response online.

The letters generally ask for $200 per infringement, and there is usually only one or two alleged instances of infringement. The problem that appeared most recently is that now Copyright Enforcement Group is sending letters for movies which appear not to have copyright protection.

Thank you for contacting me about your DMCA issue. I’m answering you honestly because you are correct that this DMCA letter scam appears to be just that — one more way of extorting money without having to file lawsuits against anyone.

I suspect that you are correct that there is a possibility that the films are not copyrighted, but you must take into consideration that since you are referring to a film which is decades old, there is not one copyright law to watch out for, but there were multiple versions of the Copyright Act which were in effect as the statutes transitioned into its current form. So while under the current copyright statute there might be copyright protection for a particular kind of film or video, past statutes might give different protections for it (and note that at one time, pornography was not even copyrightable). You also need to take into consideration that U.S. Copyright Law gives copyright protection to foreign-made films, and this might be one.

As you no doubt know, with some obvious exceptions, I charge a flat rate to handle copyright matters. For your “DMCA scare letter” issue, included in that flat fee would be to research whether there is a copyright or not, and what their legal rights are. But to keep this simple, we both know their extortion strategy, and we both know that their online form [@copyrightsettlements.com] provides a release from claims for $200 each. While I have never seen anyone sued as a result of ignoring their letters, $200 x 3 is still less than having me research and argue your issue (especially where there is no lawsuit and there may never be one). That being said, if you didn’t want to deal with their website (because of the games they play where I have heard of people being sued who went online and the site failed [whether by design or by bad luck] or they missed their deadline and they could no longer settle) or you wanted me to handle the transaction, I’m happy to handle all three transactions for one small fee.

Long story short, you have some quick decisions to make before your November 4th date. If you want me to handle this for you, let me know and I’ll e-mail you a contract for you to sign and get back to me, and I’ll e-mail you a link that you can click on to process your payment. I’ll also need you to e-mail me copies of each of the DMCA scare letters, and I’ll take care of the rest. Once again, I am not advocating settling this — I think this is one more extortion tool [of many] up their sleeve — but if you wanted to dispose of it quickly, this is the cheapest and most effective way to do so. Unlike the bittorrent lawsuits, I don’t think you need to pay me to research and fight this because you have no lawsuit yet against you.

NOTE: One more note for those who are security-minded on the topic of IP tracing and CEG’s website “which sometimes fails.” I understand that CEG-TEK tracks IP addresses who visit their website. As a lawyer, I think it would be a bad idea for someone facing a copyright infringement lawsuit to sign onto a website possibly with the same IP address as the person who allegedly downloaded the copyrighted materials. I would suspect that CEG-TEK is not so evil that they have an app running that if there is an IP address match, the site fails [when you try to process your payment] and they automatically send a second scare letter for $3,500. At the very least, however, you want a lawyer to make sure that the contract they give you will protect your interests because by logging into their website and using their “secret code” to access your “secret” settlement amount, and then by entering your full name, address, phone number, and credit card information [which means that you just identified yourself as being that downloader, and so they need no ISP subpoena to identify you], that contract better release you from liability.

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